Trademark Law Developments Mark S. Graham, Esq. The Graham Law Firm, PLLC Knoxville, TN

Transcription

1 Trademark Law Developments Mark S. Graham, Esq. The Graham Law Firm, PLLC Knoxville, TN

2 TRADEMARK LAW DEVELOPMENTS Presentation Text A. First Amendment s Application to Trademark/Unfair Competition Law Matal v. Tam, 137 S. Ct (2017)- As quoted from Oyez, the Disparagement Clause prohibits trademarks that disparage the members of a racial or ethnic group and violates the Free Speech Clause of the First Amendment. The portion of 1052(a) (a/k/a 2(a) of the Lanham Act) containing the so-called Disparagement Clause reads as follows: 15 U.S. Code Trademarks registrable on principal register; concurrent registration No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it (a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; (emphasis added). The majority opinion in Tam held the plain meaning of the Disparagement Clause clearly applied to racial and ethnic groups, and therefore the Clause applied to the mark at issue in this case. In their view, the Clause also facially discriminated based on viewpoint. The Court said giving offense constitutes a viewpoint. The Court further stated that the PTO s registration of trademarks is not government speech, to which the First Amendment prohibitions on viewpoint regulation would not apply. Holding otherwise would, in the Court s opinion, constitute a massive and unwise expansion of the government speech doctrine. Similarly, the Court held that PTO "Slants" has been considered a derogatory term for people of Asian ancestry. The fact that an Asian rock group wished to use the term (perhaps) ironically was immaterial to the case. approval/disapproval of a trademark for registration does not constitute granting or denial of a government-provided subsidy, an area of cases in which viewpoint discrimination was sometimes determined to be constitutional. Finally, the Court rejected the argument that the Disparagement Clause was a permissible regulation of commercial speech. The Court said the Clause is not narrowly drawn to serve a substantial government interest. In the view of the 2

3 Court, any asserted interest of avoiding offense clearly contravenes the purpose of the First Amendment s protection of free speech, and the Clause is too broad to serve the government s other stated interest of protecting the orderly flow of commerce. In the underlying decision, In re Tam, 808 F.3d 1321 (Fed. Cir. 2015) (en banc) (Fed. Cir. 2016), Judge Moore wrote for the en banc Federal Circuit as follows: The government cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks. It cannot refuse to register marks because it concludes that such marks will be disparaging to others. The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of 2(a) is unconstitutional. Because the government has offered no legitimate interests justifying 2(a), we conclude that it would also be unconstitutional under the intermediate scrutiny traditionally applied to regulation of the commercial aspects of speech. We therefore vacate the Trademark Trial and Appeal Board s ( Board ) holding that Mr. Tam s mark is unregistrable, and remand this case to the Board for further proceedings. Comment- The Oyez website devoted to Supreme Court jurisprudence contains what may be a Freudian slip, noting that the disparagement clause of 15 USC 1052(a) prohibits trademarks that disparage the members of a racial or ethnic group and violates the Free Speech Clause of the First Amendment. Obviously, 1052(a) does not prohibit trademarks it just prohibits registration of trademarks. This is a common misperception likely to be exacerbated by Tam. The Court s holding appears to conflict with basic principles of trademark law and unfair competition, which clearly governs commercial speech, to which the relaxed scrutiny outlined in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm n of N.Y., 447 U.S 557 (1980) has traditionally applied. Many are noting the deregulatory trend underlying Tam in terms of the commercial speech doctrine. Leading Case, Matal v. Tam, 137 S. Ct (2017), 131 Harv. L. Rev. 243 (2017). The Tam decision could cause much distress in years to come for those seeking to maintain the Lanham Act s regulatory impact on trademark protection, traditionally somewhat insulated from First Amendment scrutiny by the commercial speech doctrine. In the wake of Reed v. Town of Gilbert, 15 S.Ct (2015), many courts (including the court in In re Tam and the Court in Matal v. Tam) seem to be swept up in a First Amendment-Free Speech Feeding Frenzy, with a particular appetite for trademark/unfair competition law. The courts now appear less attuned to the Constitutional prerogative of Congress to regulate commerce vis the Lanham Act. The Court in Tam might also have been led astray by the disagreement of the parties filing briefs, some of which argued trademarks were commercial speech, and some of which (including the Applicant himself) argued all trademarks have an expressive component. The dismissive approach of both In re Tam and Tam to the commercial speech argument may prove to be regretful to the world of commerce. 3

4 1. Fallout (good or bad) from Tam. Pro Football, Inc. v. Amanda Blackhorse et al., , 4th Cir., 2018 U.S. App. LEXIS 1186 (reversing and remanding district court decision confirming cancellation of six registrations for forms of the mark REDSKINS in light of Matal v. Tam). Quoting from the unpublished opinion: While this appeal was pending, the Supreme Court in Matal v. Tam, 137 S. Ct. 1744, 1751 "Redskins" has been considered a (2017), determined that 1052(a) violates the disparaging term for Native free speech clause of the First Amendment. In Americans. light of this determination, we vacate the district court s order and remand for further proceedings consistent with Tam. "FUCT" was initially denied registration for its "scandalous" or "immoral" nature as a homonym for an obscenity. In re Brunetti, No , 2017 WL (Fed. Cir. Dec. 15, 2017). In the wake of Tam, the Federal Circuit declared the immoral and scandalous portions of 2(a) unconstitutional. In a panel decision also written by Judge Moore, author of the In re Tam decision, the Federal Circuit determined the bar in 2(a) against immoral or scandalous marks to be unconstitutional because it violates the First Amendment. The panel reversed the Board s holding that Mr. Brunetti s mark (FUCT for apparel) was unregistrable as an immoral or scandalous mark prohibited from registration under 2(a). In its In re Tam decision, the Federal Circuit found the disparagement portion of 1052(a) to impermissibly discriminate based on viewpoint. In its In re Brunetti decision, the Federal Circuit found the immoral and scandalous portion to impermissibly discriminate based on content. In the court s view, a content-based statute exists when the law restricts particular speech because of the topic discussed or the idea or message expressed, making the statute subject to the rigors of strict scrutiny. Under existing law, such statutes are only permissible when the government proves the restriction (1) furthers a compelling interest and (2) is narrowly tailored to achieve that interest. The USPTO presented an extensive variety of government interests in an effort to justify the immoral and scandalous prohibition. However, the court found the government failed to demonstrate an interest requiring an expressive restriction, and that the government also failed to prove that the regulation advanced those interests. 4

5 Interestingly, the Federal Circuit deemed the USPTO s inconsistent application of the immoral or scandalous provision as proof that the regulation is more extensive than necessary to serve the asserted interests. Identical or nearly identical marks were both accepted and rejected by different examiners. For instance, the court referenced forty marks containing the same acronym, where twenty of the applications received an office action refusing registration based on Section 2(a), while the other twenty did not. In the opinion of the court, these discrepancies and inaccuracies highlighted the provision s vagueness and subjective nature. Although the court noted it was not eager to see a proliferation of [scandalous] marks in the marketplace, it determined the government failed to offer any substantial interests justifying what the court deemed to be an unlawful restriction on expressive content. Comment-In view of Tam and In re Brunetti, the USPTO is now forced to register and give its imprimatur to a variety of unsavory marks that would previously have been statutorily barred, by the express will of the people. Perhaps pubic recognition and appreciation of this judicial legislation will motivate Congress to act. Twentieth Century Fox Television v. Empire Distribution, Inc., (Ninth Cir. 2017). The Ninth Circuit affirmed the lower court s ruling that the television show s title (EMPIRE television show about a record label company) was speech protected under the First Amendment and did not infringe upon the EMPIRE marks owned by the multi-genre record label Empire Distribution for its record company and record business. The "Empire" decision represents a striking expansion of the "expressive work" or 1st Amendment defense to trademark infringement. Time will tell how far this exception will extend. panel characterized the Rogers test as follows: According to the court, when an allegedly infringing use is in the title or within the body of an expressive work, the two-pronged test of Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) is to be used to determine whether the Lanham Act applies. The Under the Rogers test, the title of an expressive work does not violate the Lanham Act unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work. Mattel, 296 F.3d at 902 (internal quotation marks omitted) (quoting Rogers, 875 F.2d at 999). We have extended this test from titles to allegedly infringing uses within the body of an expressive work. See E.S.S. Entm t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1099 (9th Cir. 2008). 5

6 The panel concluded that the first prong of the Rogers test was satisfied because the panel could not say that Fox s use of the mark had no artistic relevance to the underlying work; rather, the title Empire supported the themes and geographic setting of the work. The second prong of the test also was satisfied because, in the panel s view, Fox s use of the mark Empire did not explicitly mislead consumers. Comment- Empire further expands application of First Amendment notions in defense of what has historically been relatively clear-cut trademark infringement/unfair competition. This decision arguably invites further adoption and use of marks of others in names and marks for any product or service that can be cast as an expressive work. B. Standing to Sue Under Lanham Act Expanded Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697 (4th Cir. 2016), cert. denied, 2017 WL (U.S. Feb. 27, 2017). On February 27, 2017, the United States Supreme Court denied certiorari in an important trademark and unfair competition case decided in 2016 by the Fourth Circuit Court of Appeals. The Fourth Circuit held that the owner of a foreign trademark (Bayer, and its mark FLANAX, used and registered in Mexico) may seek certain relief under Lanham Act 14(3) and 43(a) based on a Both products are generic for Naproxen Sodium, however what is striking is the fact that Bayer has never used the Flanax mark in commerce in the US. domestic company s use of mark in commerce and its federal registration of the mark (Belmora, and its mark FLANAX used and registered in the US) to deceive U.S. consumers, even if the plaintiff has not used its foreign mark in the United States. Precedent-Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct (2014)-To state a cause of action under 43(a) (USC 1125(a)) a plaintiff must assert a claim that falls within the zone of interests of 43(a) and allege proximate causality. For purposes of 43(a), this means the plaintiff must (1) allege an injury to a commercial interest in reputation or sales and (2) ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant s advertising, stating that such an injury is sufficiently direct when deception of consumers causes them to withhold trade from the plaintiff. C. Color Cases Deere & Co. v. FIMCO Inc., (W.D. Ky., No. 5:15-cv TBR-LLK, 10/13/17). On October 13, 2017, District Judge Thomas B. Russell ruled that Deere & Co. s symbolic green and yellow colored tractors are in fact a trademark. Judge Russel held that FIMCO s use of yellow and 6

7 green colors for their pesticide and other agricultural sprayers infringed and diluted Deere s trademark. Deere & Co. relied on three registered trademarks with the United States Patent and Trademark Office for the green-yellow color combination. The court put on significant evidence for these registrations and Deer s proof that it had expended considerable amounts of money and effort building consumer association between the [green and yellow colors] and its [equipment], while FIMCO has marketed its green and yellow less extensively and for a shorter period of time. Judge Russel explained that the relatedness of the goods, the similarity of the marks, evidence of actual confusion, the marketing channels used, and the likelihood of expansion factors Even a two-color combination can acquire trade dress status if the mark has developed sufficient consumer recognition. Such is the case with the distinctive green and yellow patterns of John Deere equipment. from using the Deere colors. all weigh in favor of Deere [b]earing in mind that a successful Lanham Act plaintiff must only show a sufficient potential of confusion (Id at para.69). The court found that Fimco intentionally chose green and yellow for its Ag Spray Equipment to create an association with Deere s brand as the maker of John Deere tractors. The court permanently barred Fimco The decision shows a company can successfully assert trademark protection in colors if it can make a strong showing that consumers have come to recognize the colors as indicating the origin of their goods. Deere had unsuccessfully asserted rights in green by itself in the past, but it now holds several federal trademark registrations for green and yellow together, which, together with evidence suggesting willfulness and evidence of actual confusion, appeared decisive. The court earlier in 2017 rejected Fimco s color coordination argument that people don t buy its green-and-yellow equipment because they re attracted to the John Deere brand, but because customers want their new purchases to match their Deere tractors. The court also rejected Fimco s argument that green and yellow were the color[s] of agriculture, and it noted that, at trial, even Fimco s CEO referred to the combination as the John Deere colors. The court ruled that Fimco could use green by itself, yellow by itself, or either color combined with other colors, but no combination of yellow and green. In re General Mills IP Holdings II, LLC, (TTAB ) (TM reg. denied to General Mills for yellow Cheerios box). The TTAB affirmed refusal of registration of the color yellow as a trademark for General Mills Cheerios boxes. The Board held that customers are more likely A yellow box is too generic for breakfast cereals for General Mills to claim protected trade dress status to view yellow packaging simply as eyecatching ornamentation customarily used for the packaging of breakfast cereals generally, 7

8 and that the evidence failed to show specific identity of yellow packaging with Cheerios. The yellow Cheerios box was distinguished from T-Mobile s distinctive magenta coloring, previously found registerable. Where General Mills has a myriad of competitors, many who use yellow packing, T-Mobile has less competition and none who uses the same color for branding. D. Trade Dress Leapers, Inc. v. SMTS, LLC, 879 F.3d 731 (6th Cir. 2018). On January 10th, 2018, the Sixth Circuit reversed and remanded entry of summary judgment for the defendants from the Eastern District of Michigan. The court ruled that on the question of trade dress, there was enough evidence that Leaper s unique style of knurling (a pattern applied to a grippable surface to enhance gripping) was ornamental and non-functional that a reasonable jury could potentially find in their favor. In order to prevail in a case for trade dress infringement based on a product s design, a plaintiff must show that its design is (1) nonfunctional, (2) has acquired a secondary meaning,and (3) is Leapers, Inc's "knurling" pattern is applied at the circled red surfaces to enhance grip and provide a visually distinct design confusingly similar to the allegedly infringing design. Leapers, Inc. v. SMTS, et al. (citing Groeneveld, 730 F.3d at 504 [citing Gen. Motors Corp. v. Lanard Toys, Inc., 468 F.3d 405, 414 (6th Cir. 2006)]). The Leapers decision is notable because it clarifies the standard for determining if a particular feature of a functional product (in this case, a scope grip) is inherently related to its function (and thus should be handled by patent) or if it is merely an ornamental choice. The court applied the two prong Inwood test for functionality. According to Inwood, a plaintiff must show that its design feature is not essential to the use or purpose of the article and that it does not affect[] the cost or quality of the article. Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, at 864 (1982). While the panel held that more discovery was necessary to resolve the issue, they held that the plaintiffs had put forward enough evidence to show that while knurling itself is a functional design to enhance a products usefulness, the design or pattern of that knurling itself is not inherently functional and is subject to a wide degree of ornamental options that convey no functional benefit. 8

9 In a similar vein, in Adidas Am., Inc. v. Skechers USA, Inc., Judge Hernandez recently granted plaintiff s request for summary judgment and denied defendant s request for summary judgment regarding issues of trade dress infringement in an ongoing dispute about several shoe designs between Skechers and Adidas. Adidas Am., Inc. v. Skechers USA, Inc No. 3:15-CV HZ, 2017 WL (D. Or. Aug. 3, 2017). The case actually concerned three different trademark and trade dress issues: 1) the Stan Smith trade dress of Adidas s footwear, 2) Adidas s distinct three stripe mark, and 3) the Supernova mark. This case has already been to the Ninth Circuit on a different issue, and may end up there again on appeal. With regard to the Stan Smith shoe, the Court knocked Defendants for taking a divide and conquer approach to the design elements (listed above) considering each one individually and in turn to argue that they were functional or simple aesthetically functional designs that bore no separate distinctiveness or ornamentality. The Court disagreed, stating that the various elements must be considered in toto, rejecting Skechers affirmative defense. With regard to the classic, Adidas three stripe mark, the Court applied the eight Sleekcraft factors (noting that a more detailed analysis would be appropriate once more discovery had taken place) to show that there was a material question of the likelihood of confusion if the facts were viewed in a light most favorable to Adidas (the non-moving party). Hence it rejected Skechers motion for summary judgment on that question. The "Classic" Stan Smith Footwear and its distinctive trade dress and design as compared to Skechers allegedly infringing "Onix" shoes. The court held that the sideways "E" of the Skechers mark was similar enough that a triable question of fact existed for the jury. Finally, The Court rejected Skechers claims that their use of the Supernova mark was descriptive fair use. Adidas prevailed in their motion for summary judgment on this question and consequently Skechers will have to look elsewhere to defend from the claims of infringement on that mark. 9